Remember when “Made in Germany” actually meant something you could count on – forever?
Yeah, me too. That feeling is getting harder to hold onto these days.
Last week another piece of that proud label quietly slipped away. Abu Dhabi’s state oil giant ADNOC crossed the 95% threshold and took full control of Covestro, one of the world’s leading producers of high-performance plastics and polyurethanes. The price tag? Roughly €15 billion. The feeling in German boardrooms? A mix of relief that someone still wanted the company and quiet panic about what comes next.
It’s not just another corporate deal. It’s a symptom of something much bigger – and frankly, much scarier for anyone who still believes Europe’s largest economy can remain an industrial powerhouse.
The Slow Goodbye of German Industry
Covestro isn’t some random mid-sized player. Its materials end up in everything from car bumpers to wind-turbine blades, from medical devices to insulation foam. About 40% of its 15,000 employees still work on German soil. Leverkusen, Dormagen, Uerdingen – these sites have been chemical-industry legends for generations.
But legends don’t pay the energy bill.
German chemical plants are currently running at around 71% capacity – a brutal 20-plus percent drop from the peak years. Operating profits at Covestro collapsed more than 50% year-on-year to a measly €87 million. High energy prices, Asian competition, and an ever-growing mountain of Brussels compliance paperwork did the rest.
When ADNOC knocked with a €62-per-share offer, the supervisory board didn’t exactly have a long debate. They took the money and opened the door.
What You Actually Lose When a Company Leaves Home
It’s not just about the logo on the factory gate changing color.
Every takeover like this quietly transfers three priceless things abroad:
- Future cash flows and dividends
- Strategic decision power (where to invest, where to cut)
- Know-how that took decades to build
From now on, when ADNOC’s board in Abu Dhabi discusses the next billion-euro investment round, German sites will compete against locations in Texas, Saudi Arabia, or Qatar. Guess who usually wins those beauty contests when energy is cheap and regulation almost nonexistent.
In my experience following these stories for years, the promises made on signing day – “we love Germany, jobs are safe” – rarely survive the first serious strategy review two years later.
This Didn’t Start Yesterday
Covestro is simply the latest chapter in a book that’s been writing itself for almost a decade.
Cast your mind back to 2016. KUKA, the Augsburg-based robotics champion, was sold to China’s Midea Group. Same script: public assurances about keeping R&D and jobs in Germany. Fast-forward to today – major new investments flow to China, not Bavaria.
Then came the wave of automotive suppliers quietly moving capacity to Eastern Europe, Mexico, or the American South. Now we’re at the point where even flagship chemical names are changing hands.
“Global industry moves forward – and no one outside Europe shares the passion for risky green policy experiments.”
That sentence has been echoing in my head since I first heard it from a frustrated plant manager two years ago. It still feels painfully accurate.
The Numbers Don’t Lie – Capital Is Voting With Its Feet
Last year alone Germany recorded a net direct investment outflow of €64.5 billion. That’s not money coming in minus money going out – that’s the net balance after everything is counted. And 2025 is shaping up to be worse.
Think about what that actually means. Every euro leaving is a vote of no confidence from the people who know the numbers best – CFOs, private-equity partners, sovereign wealth funds.
They’re not leaving because they hate Black Forest cake. They’re leaving because the math no longer works.
Energy Prices: The Silent Killer
Let’s talk about the elephant in the room nobody in Berlin wants to shoot: electricity costs.
German industrial power prices are still roughly double those in the United States and triple those in parts of the Middle East. For energy-intensive sectors like chemicals, aluminum, or steel, that difference is literally the margin between profit and loss.
The so-called “industrial electricity price” subsidy discussions feel like putting a band-aid on a broken leg. Companies need predictable, globally competitive energy costs for the next twenty years, not a temporary discount that might disappear with the next coalition agreement.
The Green Deal Paradox
Here’s the bitter irony that keeps me up some nights.
Europe wants to lead the world in climate protection – admirable goal. But the way it’s being executed is pushing the very industries that could deliver green technologies straight into the arms of countries that couldn’t care less about CO₂ certificates.
The upcoming expansion of the EU emissions trading system to more sectors in 2027 is already casting a long shadow. Many companies are making relocation decisions now to front-run that cost explosion.
Perhaps the most interesting aspect – and the most frustrating – is that nobody in the Brussels bubble seems willing to admit the obvious trade-off: you can have the world’s most ambitious climate targets, or you can have a competitive industrial base. Trying to have both without cheap nuclear or a functioning bridge technology is turning into a very expensive experiment.
Meanwhile, Across the Atlantic…
While Europe ties itself in regulatory knots, the United States is rolling out the red carpet.
Deregulation of energy markets, massive tax incentives, and a clear political signal that manufacturing is welcome again – the contrast could hardly be starker.
German companies are listening. Aurubis investing billions in the U.S., Bosch expanding American capacity, rumors swirling around other big names – the list keeps growing.
Add sovereign wealth funds from the Gulf promising trillions for American projects, and “Made for USA” suddenly sounds a lot more attractive than “Made for Germany.”
What Happens to the Mittelstand When the Big Guys Leave?
This is where the story gets really painful.
Germany’s famous Mittelstand – those hidden champions supplying specialized components – doesn’t exist in a vacuum. They live or die with their big anchor customers.
When a Covestro or a BASF scales back German production, hundreds of smaller suppliers feel the pain immediately. Orders dry up, R&D budgets shrink, skilled workers start looking elsewhere.
We’re talking about a deeply interconnected ecosystem that took generations to build. Once the big nodes start disappearing, the whole network begins to wobble.
Is There Any Way Back?
Honest answer? It’s going to be incredibly hard.
Reversing capital flight requires more than speeches and photo-ops with CEOs. It requires a fundamental rethink of energy policy, regulatory burden, and yes – climate policy implementation.
Some voices are finally getting louder. Industry associations that used to stay politely quiet are now openly warning about deindustrialization. Even parts of the political center are starting to question whether the current path is sustainable.
But time is not on Germany’s side. Every month that passes without bold decisions is another month where investors place their bets elsewhere.
The Covestro takeover isn’t the end of the story. Unfortunately, it probably isn’t even the final chapter.
When historians look back at this period, they might very well mark 2025 as the year when “Made in Germany” stopped being a guarantee and started becoming a memory.
I really hope I’m wrong about that. But hope alone won’t keep the factories running.
